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Oregon State Bar Bulletin — NOVEMBER 2006

Losing By Forfeit?
Oregon goes its own way with forfeiture law and new ruling
By Janine Robben

Imagine if asset forfeiture appeared as this question on the bar exam: A marijuana dealer has been using his grandmother’s basement for his grow operation. Can the government seize — and forfeit — her house as a penalty for his crime?

Like any good bar exam question, this one suggests a number of issues, including constitutional ones like "proportionality" and "due process."

At the federal level, these issues are not keeping government from seizing and successfully forfeiting everything from elephant tusks to brand-new Hummers.

But at the state level, forfeiture in Oregon has not gone smoothly since 2000, when the passage of a ballot measure led to what became six years of legal limbo. Things took another uncertain turn on Oct. 19, when the Oregon Supreme Court finally found the ballot measure to be constitutional.

The fact that Ballot Measure 3 passed at all still rankles law enforcement, which has been seriously affected by the loss of forfeiture-derived funding.

"Ballot Measure 3 was directed at an imaginary problem — abuse of property rights," says Multnomah County Deputy District Attorney Mark McDonnell, who saw the drug unit he’s supervised since 1997 decimated after the measure passed. "Insufficient resources for drug enforcement is real."

But David Fidanque, executive director of the ACLU of Oregon, didn’t — and doesn’t — see the constitutional issues raised by forfeiture as an imaginary concern.

"We had no problem with wanting to take the profits out of crime," says Fidanque, who worked on Ballot Measure 3. "We just want to be sure the government is taking property from criminals, rather than innocent people who don’t have the resources to prove their innocence. Most Oregonians were unaware that it was possible to lose property because of alleged involvement in criminal activity, even if you were never accused or convicted of a crime. When we explained that to persons outside the criminal justice system, they were able to see that very quickly as an abuse of power."

Federal Forfeiture
Walk into Leslie Westphal’s Portland office, and it’s easy to think that the success of federal forfeiture in Oregon is due as much to a person as to federal law.

Despite the fact that Westphal is head of the U.S. Attorney’s Office’s Forfeiture Section, deputy chief of the Civil Division of which it is part and an international lecturer on forfeiture law, there are no piles of paper on her desk. Instead, there is a sprawling bouquet of pale yellow roses and dahlias. ("She probably grew them herself," gripes a long-time friend good-naturedly. "When she invites you over for Mexican, she makes the taco shells herself. With lard.")

But despite appearances, Westphal’s job is not easy. Nor was it easy for her to set up the Forfeiture Section in 1988, when Congress appropriated money to hire approximately 90 assistant attorneys general nationwide — including her — to start implementing federal criminal forfeiture laws.

Those laws had been on the books, but largely unused, since 1970.

"We all had a lot to learn in those first few years," says Westphal, a former prosecutor. "It was like turning an aircraft carrier around to think that simply putting people in jail was not enough. We’ve evolved."

Unlike incarceration, which is punitive or rehabilitative — depending on your point of view — the purpose of forfeiture laws is to take the profits out of crime.

"Unlike some other crimes, drug dealing only takes place because it’s profitable," says Portland attorney Michelle Burrows, who has prosecuted and defended against forfeiture actions for a total of 21 years. "If you cut off the money, you cut off the reason to do the crime."

Forfeiting property is complicated by the fact that there are three different kinds of property subject to forfeiture (contraband, proceeds of crime and instrumentalities of crime); three kinds of forfeiture proceedings (criminal, civil and administrative) and multiple levels of government that handle forfeiture cases. (See sidebar.)

Having mastered existing forfeiture law, federal forfeiture attorneys like Westphal had to re-educate themselves when Congress passed the Civil Asset Forfeiture Reform Act (CAFRA) in 2000.

Like Oregon’s Ballot Measure 3 — which was also passed in 2000 — the impetus for the CAFRA was government’s ability to seize and civilly forfeit property without a related criminal conviction of the property’s owner or user.

"They don’t have to convict you," House Judiciary Committee Chairman Henry Hyde, R-Ill., said in support of the act, which he co-sponsored. "They don’t have to charge you with a crime. But they have your property."

While the CAFRA did not eliminate civil forfeiture, it did provide for a number of procedural safeguards, including elevation of the government’s burden of proof from "probable cause" to "the preponderance of the evidence."

Based on the numbers, forfeiture is still big business for the federal government. For the federal fiscal year ending Sept. 30, 2000 — the year in which the act was passed — the U.S. Department of Justice1 reported $545.2 million in seized property (like cash) and $731.8 million in forfeited property, for a total of $1,277 million. For the federal fiscal year that just ended Sept. 30, 2006, the total was $1.14 billion.

Despite passage of the CAFRA, local forfeiture expert Burrows says that the number of federal forfeiture cases — both civil and criminal — has increased "a lot" since 2001.

"It’s not just drugs anymore," says Burrows. "It’s white collar crime, Internet crime, securities.

Burrows says the federal government also is "going after alleged funding for terrorist groups, noting that "Their definition of ‘terrorist group’ is somewhat expansive."

Burrows says that federal statutes — which unlike their state counterparts allow federal investigators to do what she calls "pre-filing eavesdropping" — make federal forfeiture cases extraordinarily difficult to defend.

"When clients come in, I tell them, ‘The feds have been investigating you for one year, maybe two, so don’t lie to me. Let’s get down to it. When you get the discovery, it’s all there: Tax returns, spreadsheets. They’ve had problems when the local officers involved (in the multi-agency team that seized the property) haven’t done their pre-filing research because of inadequate resources or access to information. Very rarely, the amount of drugs involved is not as large as claimed, or there’s a bad CRI (confidential reliable informant). But basically, your client is screwed by the time he gets indicted. It’s all about negotiation. Basically, at the federal level, it’s begging."

Nonetheless, Westphal says that federal forfeiture attorneys still have to confront the same issues that were raised by both the federal Civil Asset Forfeiture Reform Act and Oregon’s Ballot Measure 3: protecting someone’s property from forfeiture without adequate due process.

"No one would think that a bank robber should get to keep that (stolen) money," says Westphal. "But by the time we catch people committing fraud (or other crimes for which forfeiture is allowed), the money is scattered in houses, cars, foreign bank accounts. We end up with third parties. It’s illegal proceeds that really should go back to the victims, but it’s much more complicated that taking money out of the hands of a bank robber."

Still, says Westphal, some cases that appear to involve innocent third parties prove to be something different.

"There’s a case out of Minnesota," she says. "Husband and wife bought a farm, and did drug trafficking on the farm. Their kids had 4-H lambs. When the government seized the property, the wife testified about what would happen to Fluffy and Binko. And the judge said, rightfully, "You should have thought of that."

Losing the Fruit of the Spoils
The television publicity in support of the initiative that became state Ballot Measure 3 began with its own "Fluffy and Binko" story.

"My name is Harry Detwiler," the ad began. "I am 62 years old. I was a special education teacher at Ashland High School for 25 years. I was Oregon’s Special Education Teacher of the Year in 1972, and was named Ashland’s Man of the Year twice.

"My problems began in 1997, shortly after my son and I sold a former rental property. The new owner was arrested for growing marijuana. During the arrest, police found my name on some of the man’s paperwork…."

Detwiler went on to say that police then took $35,000 from his own home’s safe under what Detwiler described as "civil forfeiture laws.

"They said I should have known the man who bought my home was growing marijuana," he said on the ad. "For three years, I have fought unsuccessfully to get my money back. …In America, people are supposed to be innocent until proven guilty. But that’s not how asset forfeiture laws work."

In fact, the civil law under which Detwiler’s money was ordered forfeited was federal, not the state civil forfeiture law — passed in 1989 — that Ballot Measure 3 sought to change.2

Nonetheless, Oregon voters passed Ballot Measure 3, known as the Oregon Property Protection Act, by a 2-to-1 margin.

The use of Detwiler’s federal case in a state campaign irritated Heidi Moawad, a Multnomah County deputy district attorney who handled her office’s criminal forfeiture cases in parts of 2005 and 2006.

"All of the examples (in the pro-Ballot Measure 3 publicity campaign) were federal," says Moawad. "Our challenge (to the proponents) has always been, ‘Bring us an example of an egregious (state) case.’ It’s never happened."

Moawad says that "the frustration on the part of law enforcement, including DAs, is that we’re very careful about forfeiture.

"Government can take property as ‘proceeds’ (i.e., cash obtained via a drug sale) or as an ‘instrumentality’ (i.e., a house with a marijuana grow in the basement)," she explains. "With instrumentality, it’s a cruel and unusual punishment/proportionality analysis, where taking the house may be overly proportional. So our offer may be, ‘Give us $10,000-$15,000 and we’ll lift the lien on the house.’ And no, we’ve never taken grandma’s house."

According to Moawad, there was no organized opposition to Ballot Measure 3, "which was a miscalculation on law enforcement’s part, obviously."

Rob Bovett, who represented law enforcement on the measure’s court challenges, says, "The primary proponent of Ballot Measure 3, ‘Oregonians for Property Protection,’ spent nearly 150 times as much as the primary opponent, ‘Citizens for Safe Streets and Neighborhoods’ — $446,838 versus $3,040." 3

But the ACLU’s Fidanque says opponents of the measure are fooling themselves if they think they could have defeated it.

"Don’t focus on where the money (in support of the measure) came from," says Fidanque, who acknowledges that the publicity campaign to get the measure on the ballot was financed primarily by what he described as "international financier George Soros, two other major industrialists" and supporters of medical marijuana. "No amount of money could have resulted in Ballot Measure 3 passing in every county in Oregon by very large margins. In fact, not much was spent after the measure was on the ballot. Once people understood the civil forfeiture process, 70 percent — based on polling — supported requiring a criminal conviction and not allowing the proceeds (of sale of forfeited property) to go back to the same law enforcement organizations that had seized the property in the first place."

Fidanque also says he doesn’t think it was the examples in the publicity campaign — which Burrows says did include several state forfeiture cases — that had the impact on voters.

"It was the fundamental policy of taking property without a criminal conviction," he says. "It’s an area where law enforcement and the legislature were just badly out of touch."

But attorney Daina Vitolins, who has worked with Oregon’s civil forfeiture statute since 1989, when she was with the Oregon Department of Justice, disagrees.

"If you’re truly an innocent owner, there’s no authority for government to take your house," says Vitolins, who is now a prosecutor in Crook County. "Before the election in 2000, I talked to my neighbors — some of whom own rental property — and they were scared to death because of the Harry Detwiler ads they saw on TV."

Regardless of why voters approved Ballot Measure 3, the effect of its changes on civil forfeitures — and on law enforcement — in Oregon was immediate, profound and long lasting.

Among other things, the measure required a criminal conviction before property can be forfeited. It also generally prohibited the use of the proceeds of forfeiture to fund law enforcement.

According to Moawad, prior to the passage of Ballot Measure 3, Multnomah County collected just over $1 million a year as a result of civil forfeiture actions. The overwhelming majority of those actions concerned drug-related crimes.

Of this $1 million-plus, the Multnomah County District Attorney’s Office got approximately $400,000, which Moawad says helped to fund two fulltime civil forfeiture deputy DAs and a drug unit with 12 deputy DAs.

"Ballot Measure 3 came at a time when, in general, government budgets were shrinking because the economy was on a major downturn," says Moawad. Now, she says, her office is getting "a nominal amount" from criminal forfeiture cases; there are no fulltime civil forfeiture deputies; its drug unit has been cut in half and law enforcement narcotics teams, in Multnomah County and elsewhere, have shrunken or been disbanded.

According to McDonnell, these losses have been felt in real, concrete terms.

"While it would be unfair to say that the state’s methamphetamine epidemic occurred as a result of Measure 3, it is indisputable that Measure 3 crippled state and local law enforcement’s ability to respond to the problem," he says. "Unfortunately, Measure 3 will continue to be an ill-conceived restraint on law enforcement’s ability to respond to the problem for decades to come."

But Ballot Measure 3’s supporters say that law enforcement shouldn’t have had a direct financial stake in forfeiture cases in the first place.

"Measure 3 passed even in the largely Republican and pro-law enforcement regions of the state," says Burrows, who says that she hasn’t seen any state civil forfeitures — statewide — since 2001. "Measure 3 passed because forfeiture was one of the largest funding sources for the specialty law enforcement teams around the state. They therefore had an incentive to take property that was profitable while overlooking other criminal activities with less ‘profit’ built in."

Challenging Measure 3
In 2000, Lincoln County attorney Rob Bovett, who is legal counsel for the Lincoln Interagency Narcotics Team (LINT) and Lincoln County, challenged the ballot measure in court. 4

Bovett argued that Ballot Measure 3 improperly combined separate issues into a single ballot measure, thereby violating the right of Oregonians to vote on separate constitutional changes separately as set out in Armatta v. Kitzhaber, 327 Or 250, 959 P2d 49 (1998). The Armatta analysis has resulted in the Oregon Supreme Court striking down all or parts of a number of ballot measures.

The suit was joined by a number of animal protection groups, including the Oregon Humane Society, who believe that the ballot measure jeopardizes the expedited forfeiture of abused and/or neglected animals allowed by ORS 167.347.

In 2001, a Marion County trial judge held that Measure 3 — while containing more than one constitutional change in a single ballot measure — did not violate the "separate vote requirement" because the changes were "closely related." The judge also ruled that Measure 3 does not apply to animal forfeiture proceedings under ORS Chapter 167.

LINT and the animal rights groups, but not Lincoln County, appealed the "separate vote requirement" issue to the Oregon Court of Appeals.

In July 2003, in a split decision, the Court of Appeals reversed the trial court, holding that the multiple substantive changes to Oregon’s constitution identified by the trial judge in the ballot measure were not closely related. Because of that ruling, the court did not address the single subject issue.

The proponents of the measure, and the state Department of Justice, then appealed to the Oregon Supreme Court.

Oral arguments were heard in November 2004: In website comments on the lawsuit, Bovett wrote that the state supreme court’s decision was "expected any day." In fact, LINT v. Kitzhaber became the oldest case on the court’s docket before it was decided Oct. 19, 2006, almost two years after it had been argued.

Ironically, the Supreme Court’s decision was so long in coming that the legislation passed in 2001 to implement Ballot Measure 3, as well as a new criminal forfeiture statute that was adopted at the same time, both sunseted in July 2005.

To remedy that problem, and in an effort to resolve their differences, representatives from various law enforcement and civil liberties groups met and negotiated a new civil forfeiture statute, House Bill 3457. The legislature also adopted provisions allowing criminal forfeiture.

While the criminal forfeiture provisions became effective immediately, the civil forfeiture provisions were, according to Crook County’s Vitolins, "dead" pending the Court’s decision in LINT v. Kitzhaber.

"It’s impossible to do a civil forfeiture case," Vitolins said, before the decision was announced last month. "It would be a real gamble to use a statute that will be invalidated if Measure 3 is upheld."

On Oct. 19, the measure was upheld by a badly divided Oregon Supreme Court,5 with one of the seven justices filing a specially concurring opinion and three more dissenting.

Bovett says the decision itself wasn’t a big surprise. "I gave it a coin toss from the beginning," he says. "It was, however, quite a surprise to see such a badly divided supreme court. Unfortunately, I think their separate vote requirement case law is now even more messy and unclear."

Now that the constitutionality of Ballot Measure 3 has been decided, whether its provisions will — finally — become civil forfeiture law in Oregon may still be an open issue.

Moawad, who had resigned from the Multnomah County DA’s office to work as judiciary counsel for the 2005 session, says that the civil forfeiture statute adopted in 2005 "put a very different version of civil forfeiture back on the books. It’s drastically changed from what it was before Ballot Measure 3."

While that statute’s provisions have now been invalidated by the LINT decision, the ACLU’s Fidanque says the 2007 legislature "undoubtedly" will be asked to refer another forfeiture measure to the voters. The purpose of the measure, he says, would be to loosen the restriction on the use of forfeiture proceeds mandated under Ballot Measure 3 to permit some portion of the funds to be used for law enforcement.

Fidanque says the ACLU is interested in "continuing the dialogue" on forfeiture that took place during the 2005 session.

"There is a middle ground on this issue," he says. "I hope that we can find the balance that will preserve forfeiture as an option, but also guarantee the safeguards of due process."

Meanwhile, Multnomah County’s McDonnell remains doleful about the dollars — not to mention the Hummers — that have been seized and forfeited by other levels of government while the Oregon debate over forfeiture continues.

"Civil forfeiture is occurring, whether or not Oregon has a statute," he says. "The federal government is seizing millions of dollars every year, and a large portion of the money that is now going to the federal government used to remain in Multnomah County."

FORFEITURE, In a nutshell
What can be seized?

Under federal and most state forfeiture laws, government has the authority to seize: contraband, such as smuggled goods, narcotics and automatic weapons, whose possession is inherently illegal; proceeds that result from, or can be traced to, criminal activity; and property, such as vehicles or real estate, which has been used to commit a crime (commonly known as an "instrumentality").

How do forfeiture actions proceed?
Under both federal and Oregon law, government can attempt to forfeit, criminally or civilly, someone’s interest in contraband, proceeds of a crime or an instrumentality of crime.

Criminal forfeiture is a punitive action in which the property to be forfeited is indicted along with a criminal defendant. If the defendant is convicted and the government proves — beyond a reasonable doubt — that the property was proceeds or an instrumentality of that crime, the defendant’s interest in the property is forfeited. (The interests of other claimants or "innocent owners" are then addressed in a subsequent civil proceeding.)

Civil forfeiture, on the other hand, is a theoretically "remedial" action that takes place separate from any criminal prosecution — and, in some jurisdictions — regardless of whether there is any successful criminal prosecution. By proceeding civilly against the property, government is seeking to remedy a wrong through the fiction of the property’s being "guilty" of the wrong. The government is the plaintiff; the property is the "defendant;" and the property owner is, in effect, a third-party claimant.

In addition, under some forfeiture statutes, an uncontested civil forfeiture may be handled administratively.

Who handles forfeiture actions?
The federal government has had statutory authority for civil forfeitures since early post-colonial days, and for criminal forfeiture — for a designated list of crimes — since 1970.

Oregon has had statutory authority for civil forfeiture since 1989 and for criminal forfeiture — again for a designated list of crimes — since 2001.

In addition, some local governments, like Lincoln County, have their own forfeiture statutes, which typically are used to seize and forfeit vehicles to punish and deter crimes like drunk driving and prostitution.

Source: Source: Cornell University’s Legal Information Institute.

Endnotes
1. Per the Assets Forfeiture Fund and Seized Asset Deposit Fund, an entity within the U.S. Department of Justice that reports the amount of money seized, and the amounts realized from forfeitures, by agencies that participate in DOJ’s Asset Forfeiture Program.

2. 1989 Oregon Laws, Chapter 791.

3. Summary Report of Campaign Contributions and Expenditures, General Election, Nov. 7, 2000, p. 343, Oregon Secretary of State Elections Division.

4. LINT v. Kitzhaber, 188 Or App 526 (2003), rev. allowed 336 Or 376 (2004), reversed Oct. 19, 2006.

5. www.publications.ojd.state.or.us/ S50900.htm

ABOUT THE AUTHOR
Janine Robben is a frequent contributor to the Bulletin. She has been a member of the Oregon bar since 1980.

© 2006 Janine Robben


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